UCTT WACC - Weighted Average Cost of Capital

The WACC of Ultra Clean Holdings Inc (UCTT) is 9.5%.

The Cost of Equity of Ultra Clean Holdings Inc (UCTT) is 11.50%.

The Cost of Debt of Ultra Clean Holdings Inc (UCTT) is 8.35%.

	Range	Selected
Cost of equity	9.30% - 13.70%	11.50%
Tax rate	33.50% - 45.20%	39.35%
Cost of debt	7.60% - 9.10%	8.35%
WACC	8.0% - 11.0%	9.5%

WACC

UCTT WACC calculation

Category	Low	High

Long-term bond rate	3.9%	4.4%
Equity market risk premium	4.6%	5.6%
Adjusted beta	1.18	1.57

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.30%	13.70%

Tax rate	33.50%	45.20%
Debt/Equity ratio	0.45	0.45
Cost of debt	7.60%	9.10%

After-tax WACC	8.0%	11.0%


Selected WACC	9.5%

UCTT's CAPM model and how its cost of Equity is calculated

The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.

This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.

Here’s how we figure out the cost of equity for UCTT:

cost_of_equity (11.50%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.18) + risk_adjustments (0.25%)

We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.